Business Analysis & The Impact of Disruptive Technologies
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By the year 2050 the world we live in will be significantly different from now. Not only do technological changes continue to occur, but the rate at which these changes happen is accelerating. In addition, many of the new technologies will revolutionize the we work, socialize and live our lives.
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Business Analysis & The Impact of Disruptive Technologies
- 1. 1 By Christian D. Kobsa Business Analysis & The Impact of Disruptive Technologies
- 2. TOC Types of Innovations Definition of Disruptive Technology Past Examples Present Examples Impacts Understanding the Impacts Overview of Present Examples …TBD… Disruptive Innovations …TBD… 2By Christian D. Kobsa
- 3. Innovation Types Sustaining: An innovation that does not affect existing markets. Evolutionary: An innovation that improves a product in an existing market in ways that customers are expecting. Revolutionary: An innovation that is unexpected, but nevertheless does not affect existing markets. Disruptive: An innovation that creates a new market by applying a different set of values, which ultimately and unexpectedly overtakes an existing market. 3By Christian D. Kobsa
- 4. Definition A disruptive technology is one that displaces an established technology and impacts the industry associated with that technology. A disruptive technology can also be a ground- breaking product that creates a completely new industry. 4By Christian D. Kobsa
- 5. Examples of Disruptive Technologies Personal Computer Window’s Operating System Email Cellphone Mobile Computers Social Networking Digital Cameras Light Emitting Diodes Hydraulic Excavators Plastic 5By Christian D. Kobsa
- 6. Present / Future Disruptive Technologies Mobile Internet Automation of knowledge work The Internet of Things Cloud technology Advanced robotics Autonomous and near-autonomous vehicles Next generation genomics Energy storage 3D printing Advanced materials Advanced oil and gas exploration and recovery Renewable energy 6By Christian D. Kobsa
- 7. Why Important to BA’s? Major importance to organizations, because: It plays a big role in the digital experience their customers have. It directly affects a firms profitability. Challenged enterprise architecture, because: Speed of new technology delivery. Constantly changing business strategies and requirements. Focus is IT agenda driven, instead of business technology (BT) driven. 21st Century is the age of the customer. 7By Christian D. Kobsa
- 8. A Paradigm Shift “The significant problems we face today cannot be solved through the same type of thinking we employed when we created them.” - Albert Einstein 8By Christian D. Kobsa
- 9. Impacts of Disruptive Technologies 9By Christian D. Kobsa Implications for Individuals and Societies: Changes quality of life, health, and environment Changes in patterns of consumption Changes in the nature of work Implications for Established Businesses and Other Organizations: Creates new products and services Shifts surplus from producers to consumers Changes in organizational structures Shifts surplus between producers or industries Implications for Economies and Governments: Drives economic growth or productivity Changes comparative advantage for nations Poses new regulatory and legal challenges Affects employment
- 10. Understanding the Impacts 10By Christian D. Kobsa How Technology Drives Growth
- 11. Understanding The Impacts (continued) 11By Christian D. Kobsa
- 12. Digital Industry Evolution 12By Christian D. Kobsa
- 13. The Mobile Internet A combination of mobile computing devices, high-speed wireless connectivity, and applications. Applications provide innovative capabilities and services, such as: Geographically location based services Personalized feeds of information and entertainment Constant online contact Seamless connection to cloud based resources Potential sectors / areas / professions effected are: Health Care Education Public sector citizen services Retail Government and private sector mobile payment Knowledge workers / professionals 13By Christian D. Kobsa
- 14. Automated Knowledge Work Computers performing tasks that rely on complex analyses, subtle judgments, and creative problem solving. Computers can increasingly perform tasks that are today performed by professionals and knowledge workers. Automated Knowledge Work computers could significantly change the nature of work as we know it. Advances in natural user interfaces allow human-machine interaction similar to human-human interaction. 14By Christian D. Kobsa
- 15. The Internet of Things Use of sensors, actuators, and data communications technology built into physical objects. It enables tracking, coordination, or control of the object over a data network or the Internet. Value creation through: Improve productivity in current operations. Allows for new products and services. Implementation of new strategies. Improved infrastructure and public services. Improved movement of traffic flow. Improved efficiency in garbage collection. Improved efficiency in water systems operation. Possible reduction in crime. Monitoring / controlling of electrical power grids and water supply systems. Tracking of products and physical assets in manufacturing environments. 15By Christian D. Kobsa
- 16. Cloud Technology 16By Christian D. Kobsa Allows delivery of IT services in which resources – data and/or software applications – are retrieved from the Internet through web-based tools and applications, rather than a direct connection to a server. Provides for more productive and flexible IT management . On demand self-service capabilities. Anytime and anywhere availability. Pooling of computing resources for multiple users and/or organizations. Usage-based pricing. Elasticity; i.e., ability to expand or shrink capacity as needed. Possibility of new business models.
- 17. Advanced Robotics 17By Christian D. Kobsa Potential for augmenting physical human labor in numerous areas. Massive productivity increases, quality gains, and cost reductions. “AI” advances allow for robotic complex judgment abilities to supplement professional knowledge workers. New advanced robotics applications are emerging in the following areas: Service industry robots Health care robots Industrial manufacturing robots Military application robots Business workflows, value streams, processes, and organizational dependencies will be impacted.
- 18. Autonomous Vehicles Partly or completely self-driving vehicles are now possible. Cars and trucks. Crop-spraying drone aircrafts. Self-guided forklift vehicles. Law enforcement drones. Military vehicles. Frees up drivers to use drive time: To perform work. To socialize. To relax. Huge potential impact for the logistics industry. Biggest hurdle to implementation: Establishing the necessary regulatory frameworks. Legal and ethical frameworks. Winning public support. 18By Christian D. Kobsa
- 19. Next-Generation Genomics …TBD… 19By Christian D. Kobsa
- 20. Energy Storage 20By Christian D. Kobsa …TBD…
- 21. 3-D Printing Additive manufacturing. Completely re-design manufacturing supply chains. Advantages over traditional construction methods: Direct link from design computer to finished part or product. Skip various manufacturing steps. Reduce material waste. Create objects difficult / impossible to produce using traditional manufacturing. Completely re-design workflow, value chains, and processes. Development of a 3D “ecosystem” for support of consumers and entrepreneurs. 21By Christian D. Kobsa
- 22. Advanced Materials Nano-technology provides opportunities for: “Green” materials Self-healing materials Piezoelectric materials Memory materials Advanced composites Nano-materials properties: Far greater surface area per unit of volume than other materials Highly reactive and bio-reactive Unusual electromagnetic, thermal, and optical characteristics Nano Electromechanical Machines (NEMS) 22By Christian D. Kobsa
- 23. Renewable Energy …TBD… 23By Christian D. Kobsa
- 24. Definition A disruptive innovation contributes in the creation of a new market and its associated value stream. Eventually, it disrupts an existing market and its value stream. In doing so it takes the place of an earlier technology. 24By Christian D. Kobsa
- 25. 25By Christian D. Kobsa References Books: “The Innovator’s Dilemma – When New Technologies Cause Great Firms to Fail” by Clayton M Christensen; Harvard Business School Press, Boston, Massachusetts “Collaboration for Sustainability and Innovation: A Role for Sustainability…” by Diego A. Vazquez-Brust, Joseph Sarkis, James J. Cordeiro; Springer Verlag “Societal Implications of Nanoscience and Nanotechnology” by Mihail C. Rocco, William Sims Bainbridge; National Science Foundation White Papers: “Strategic Principles for Competing in The Digital Age” by Martin Hirt and Paul Willmott ; May 2014 McKinsey Quarterly, McKinsey & Company “Disruptive Technologies – Advances That Will Transform Life, Business, and The Global Economy” by James Manyika, Michael Chui, Jacques Bughin, …; May 2013 McKinsey & Company “The Internet of Things in Logistics” by Andreas Nettstraeter @ Fraunhofer IML “Internet of Things – From Research and Innovation to Market Development” by Ovidiu Vermesan, Peter Friess; River Publishers Web Sites: http://en.wikipedia.org/wiki/Disruptive_innovation http://whatis.techtarget.com/definition/disruptive-technology
Hinweis der Redaktion
- There are different types of innovations. Each one has different consequences on existing markets, and on the way business organizations service that market. Because of that fact, it is important for business analysts to understand what type of innovation they are dealing with when involved with a particular business project. Each innovation type – from the 1st bullet point to the 4th bullet point – deals with increasing complexity, impact to the business organization, impact to markets served, and society as a whole. Let’s consider some examples for each of the innovation types. A sustaining innovation is one that supports and extends the current dimension of performance. E.g., Intel developing faster and faster chip speeds. An evolutionary innovation reflects incremental product or process improvements. These are small scale ideas that sustain a business for many years. The “continuous improvement” philosophy is a good example of this. You can see this exemplified in the Toyota car manufacturing company. Over the years Toyota has continuously and consistently worked on improving their product and their processes that create their product. In doing so they have continuously improved their products. Evolutionary innovation optimizes and exploits the existing business model and processes and prolongs their life. It is also true, that evolutionary innovation focuses on today’s customer. A revolutionary innovation concerns breakthrough concepts…
- From this definition we can see that disruptive technologies have significant implications. What exactly the implications are depends to a large degree on what disruptive technology has been invented. However, regardless of what it is, it does affect the business organization. And that is why it is imperative for business analysts to be in the know, when it comes to this subject.
- To get a better idea of what we mean by the term “Disruptive Technology” let’s take a look at the examples on this slide. The disruptive technologies shown here are all one’s that have already dramatically changed the world we live in. This is past tense. These are just a few of many technology based inventions that changed entire industries, business organizations, and society as a whole. Personal Computers: Minicomputers were originally presented as an inexpensive alternative to mainframes and mainframe manufacturers did not consider them a serious threat in their market. Eventually, the market for personal computers & minicomputers became much larger than the market for mainframes. Window’s OS: It was the combination of affordability and a user-friendly interface that was instrumental in the rapid development of the personal computing industry in the 1990s. Personal computing disrupted the television industry, as well as a great number of other activities. Email: E-mail has replaced postal mail because it can send messages over vast geographical distances in mere milliseconds without wasting paper or requiring the spending of money for postage stamps. Cellphone: the invention of mobile telephones made it possible for people to call from anywhere and disrupted the telecom industry. Mobile Computers: Laptops and tablets allowed for a mobile workforce and made it possible for people to connect to corporate networks and collaborate from anywhere. In many organizations, laptops replaced desktops. This has had, and continues to have, a great impact on how organizations do business. Social Networking: This has had a major impact on the way we communicate and do business. It has disrupted telephone, email, instant messaging and event planning, etc… Digital Cameras: They have replaced the camera film business. The most well-known example, is the catastrophic failure of Kodak. Regarding the example of Kodak, the really sobering aspect is, that Kodak had invented the digital camera, but failed to see the potential, and when it finally realized where business was heading, it was to late to adapt. More on this later…! Light Emitting Diodes: … Hydraulic Excavators: … Plastic: …
- When you look at this list, these are all terms we’ve heard or read about. The point is, these are technologies that already exist. However, they are being continued to be refined. Much of what we see here, is on the bleeding edge of innovation. That will change soon or is already changing. And once the innovation becomes mainstream, it will affect individuals, businesses large and small, as well as government.
- If organizations do not embrace emerging and disruptive technologies, it will directly impact how it’s customers are affected by the digital experience they have with them. And the impact is very likely going to be negative, which directly affects the company’s profitability. It is obvious, that enterprise architecture has a huge task ahead of it. What makes it at times a very difficult and almost impossible undertaking, are not the first two sub-points on this slide; it is the 3rd point. Because enterprise architecture is typically under the umbrella of the IT organization, it’s architectural approach is IT focused – i.e., improvements of internal processes, data architectures, and making technologies fit into that framework. In other words, it’s a continues honing of the already existing way of doing things. This is of course not saying, that these kind of improvements are not meaningful or necessary if they improve the efficiency and effectiveness of the business organizations. However, in order to make significant, game changing, quantum leaps in improvements, enterprise architecture must embrace a paradigm shift in thinking. It must embrace business technology focus. The BT focus is with the realization that businesses deal with increasingly powerful customers, and that the aim of enterprise architecture has to be on how to win, serve, and retain them. The focus in not on how to best streamline a process. We note here, that if enterprise architecture takes a BT focus, the activities that typically fall under an IT focus, e.g., work stream, value stream, and process improvements, BI architectures, data warehousing approaches, IT network architectures, etc., will be also affected and improved. The difference is that the APPROACH to these improvements will be different. It’s a new way of thinking of the problem. In other words, the new approach amounts to a paradigm shift.
- This quote by Albert Einstein is profound in its accuracy and consequences it reveals. It’s put on this slide, because it represents an axiom, a basic principle, a self-evident and universally recognized truth. And it most definitely holds true in the world of commerce, business, and government! What this quote is telling us is, that we need to think differently from the way we have been thinking, when it comes to addressing significant problems we are facing today, and the ones that will have weighty consequences in the future. Of course technological innovations will play a big part in solving problems we face, be they social, environmental, business, etc. But innovations in technology implemented and used in the same manner as we have to date over the last one hundred plus years will not deliver real progress towards sustainability, let alone improvements in quality of life. Equally, if not more important, is innovation in our thinking. That is, in the way we understand and seek to manage the interrelationship between economic activities, social progress, and the natural environment. This requires a revolution in the “hardware” and “software” of society. The hardware is technology, and it is changing rapidly. The software is us. Humans. And we’re not changing. Wherein lies the problem, and what is the solution? The solution is found in the quote on this slide. One of the most, if not THE most significant problem we have behaved ourselves into, is that current economic activities, social progress, and use of the natural environment cannot be sustained if we continue with a “business as usual” mindset. This “same type of thinking” that got us were we are, cannot be employed if humanity wants to progress. So the solution lies in a new type of thinking. But to implement a new type of thinking, we must first clearly understand WHAT EXACTLY the type of thinking was/is that got us were we are. One of the problems in our way of thinking, that requires a paradigm shift is our tendency to artificially divide, delineate, and separate things. For example we do that in politics and geography, drawing arbitrary lines of governance and imposing these over natural landscapes and ecosystems. We have done so by thinking up an artificial separation about business, economics, and finance from the services of natural resources and ecosystems on which we all ultimately depend. When it comes to types of human activities, we have also artificially divided them up and labeled them as “commercial enterprise”, “social enterprise”, “public service”, and “civil society”. With regards to knowledge itself we also are increasingly “specializing” and compartmentalizing it, by dividing and sub-dividing academic disciplines ever more finely.
- This slide really drives home why the subject of disruptive technologies is an important one to the business analysis profession. The implications are huge. Consider just a few items on this list: Changes in the nature of work that means that it will change workflows, value streams, potentially even business architecture all together. Creates new products and services that means new workflows, value streams, processes need to be identified. In addition the question arises how will these interact with existing workflows, value streams processes and organizational structure? Poses new regulatory and legal challenges new regulations must be viewed in the context of existing workflows, value streams, processes, etc., to ensure that no conflicts exist, or if there are, how to handle these. This slide also shows that these profound changes are across several dimensions, effecting the lives of individuals, businesses and the global economy as a whole. Some of these technologies have the real potential to drive tangible improvements in quality of life, health, and the environment. And a bigger number of these technologies are likely to change how and what consumers buy. It also is likely to alter overall consumption of certain resources; i.e., energy, materials, etc…. And some of these disruptive technologies can fundamentally change the nature of work in manufacturing and knowledge work. Just about all the technologies that are identified as disruptive are potential game changers for business organizations. They do that by creating entirely new products and services. They can also influence value pools between producers but also from producers to consumers. It also is likely to impact how companies and other organizations structure themselves – i.e., the anytime/anywhere work concept will acquire new meaning.
- As this slide shows, world society has experienced two industrial revolutions that have dramatically changed the world we live in. And it is safe to say, that we are currently undergoing a 3rd Industrial Revolution. That 3rd revolution is driven by the ability to digitize all kinds of data, at incredible speeds and in enormous quantities. The technologies that allow us to do this of course, are the various advancements in electronics. Just as the 1st and 2nd Industrial Revolutions were the cause of surging productivity and economic growth, the 3rd will, and already does, do the same, for those who know how to take advantage of it. With the improvements in speed and quantity and quality of data capture by electronic devices and well as the inventions of new types of data sensors, entirely new ways of enabling and improving efficiency and effectiveness of performing tasks are possible. It also creates the possibilities of entirely new types of businesses.
- It turns out, that the general-purpose electronic technologies are particularly powerful and disruptive. It is their pervasiveness that makes them so. Consider the Internet, smart phones, and tablet computers. These technologies have, and continue to, introduce entirely new ways of communicating, receiving information, and reacting to it. This in itself, is introducing new rules of engagement, that all sorts of industry sectors, companies and businesses have to adapt to. The result is, that it rearranges at a minimum business processes within organizations. More likely, to stay competitive, companies must rethink and restructure their information system architecture and business architecture, in line with new value stream process definitions. This explanation also shows why this subject should be of great interest to the business analysis professional.
- The first bullet point is a non-formal definition of what we mean by the “Mobile Internet”. The term itself does not represent a stand alone technology. Rather the “Mobile Internet” is the result of several technologies coming together and allowing for a mobile Internet experience. The separate three technologies that make this possible are (1) mobile computing devices such as smart phones, laptops, and tablets, (2) high-speed wireless connectivity, and (3) software programs or applications that run on these mobile computing devices. The first two technologies are tangible hardware. By itself they don’t do much of anything. It is the 3rd component – the software applications – that provide the incredible potential that comes with the other two. As the sub-points under the 2nd bullet show the implications of just these four checkpoints have already changed the ways the world operates, and it will continue to do so at an increased pace. This will happen over a wide range of sectors, areas, and professions. We’ll briefly touch here at a high level on a few; (see the reference section for several white papers, some going into considerable depth): …TBD…
- The 1st bullet point is a non-formal definition. The ability for machines to do this, represents an incredible advancement in technology, and is made possible by three advancements in technology: (1) increases in computing abilities (processor speeds, memory capacity, etc.); (2) enhancements in machine learning; (3) enhancements in natural user interfaces. The 2nd bullet point is a direct consequence of the first. This is going to have massive implications for how knowledge work will be conducted in the future. It has the potential to extend the powers of human workers, by allowing them to offload tedious detail work to the machine. It’s not hard to see, how this can greatly affect society for good and/or bad, being the spark for complex societal changes and challenges. …TBD… The 4th bullet point makes it possible to talk directly to a computer as one would to another person, and ask for the information needed, instead of making a request to the IT department and then waiting for them to write the query to extract the information. This allows for more timely data access, and raises the quality and pace of decisions made. Hence it also improves performance. From these few points it is clear, that automated knowledge work will change the way business organizations do their work and compete in the global markets. That is, activities that are performed by humans, may very well be performed by machines. This will affect the processes of which the activities are a part of. Other automated activities which are part of another process, may need to interact with the former process, etc. Who knows what other possibilities may emerge, as automated knowledge work becomes a reality. Regardless, these are the sort of things that require considerable and highly skilled analysis talent, that only well rounded, detail oriented, yet holistically thinking professional business analyst can perform successfully. By “well rounded” and “holistic” we mean individuals that think beyond just the project at hand. In this context, what is needed are professionals that consider the long-term consequences of decisions, and look for ways to benefit the organizations now AND for decades to come. Clearly, this requires out-of-the-box thinking!
- For the Internet of Things to work, it requires three steps: (1) capturing data from the object, (2) aggregating that information across a data network, (3) acting on that information. The Internet of Things is brining about technological changes that amount to a paradigm shift. It decentralizes production control. The big question for strategic business analysts is how this will affect the classic production process and the manufacturing value chain? The current belief is, that production across the world, will become more and more networked. It is also suggested, that logistics is going to be at the forefront of these developments. One thing is for sure: logistics and the entire supplier network will grow enormously more complicated. I.e., The Internet of Things will also bring great opportunities and challenges to operations of infrastructure and public services, with governments being a major adopter of Internet of Things applications. Whether in business or in government the potential is huge, but it will be realized only with a substantial investment in capabilities. One of the biggest challenges with regards to the Internet of Things are the privacy risks associated with it. With sensors being able to capture and monitor all sorts of new data, i.e., your home’s electricity / water / gas use, TV program viewing patterns, where you go when you drive your car, activities on the road you live on, etc. it allows for an unprecedented level of surveillance, and hence raises legitimate concerns about how all that information is going to be used. And because the Internet of Things is not locally restricted, but is truly a global network, policy makers must thing comprehensively, on a global scale. This will require working across borders and at various levels of governments to make sure the individuals rights, as well as the communities rights can be protected and enforced on a global scale. All this demands the creation of entirely new standards, operational procedures, processes, for business and government organizations alike. Hence, a new type of business analyst must emerge, to be able to handle projects of such enormous complexities.
- Just as the other developments considered so far, Cloud Technology has the potential to disrupt the way organizations use their IT departments and how data and software products are being used. The entire “as-a-service” concept is based on the Cloud. And as with the other technological advances already discussed, whenever there is the possibility of running a business operation in a more effective and efficient way, it affects work flows, value-streams and business processes. All this is exactly what business analysis is all about.
- Robots have been around, particularly in industrial manufacturing, for decades. However, wee are mentioning here the next generation of this technology – advanced robotics. And it is developing at an advanced pace in all the areas mentioned on this slide. Artificial Intelligence through advances in neural networks, development of advanced and sophisticated sensors that can mimic human sensing abilities, and continued advancements in miniaturization, along with new, stronger, and lighter materials, is brining what a decade or two ago was science fiction, into the realm of technological reality. The impact on governments, business organizations, and society at large, will be enormous. For the business analysis profession the same is true, as the last bullet point highlights.
- It’s not hard to see, how cars and trucks that will be able to drive themselves can give rise to an entirely new type of vehicles configured to maximize work space, or even provide beds for passengers. Another concept is of sharing cars in which a car arrives or leaves and parks itself wherever and whenever it is needed. This allows for the possibility of public transportation vehicles providing greater flexibility and personalization. Considering these possibilities and the fact that the average American car owner spends 750 hours a year driving – the equivalent of four months of work days! – it becomes quickly apparent that autonomous cars have the potential to improve the quality of life (resting, reading, etc. during driving), improve productivity (ability to work while driving), and potentially completely change existing business models. When it comes to the logistics industry, autonomous vehicles have an even greater potential to improve the economics of trucking, and fundamentally change existing business models. And productivity and business models are exactly the sort of things business analysts concern themselves with.
- Additive manufacturing is the industrial version of 3D printing. So far this technology has been mainly used to make niche items or produce plastic prototypes for engineers and designers. However, now serious thought is being given to use it to mass produce critical parts for consumer products, and in the manufacturing of vehicle parts, etc. This technique to creating parts is a fundamental break with traditional manufacturing techniques, and hence manufacturing processes, and everything that comes with it. This leads to the second and third bullet point on this slide. Because of the advantages listed, it is reasonable to expect that expectations for better quality design and personalization will rise; (e.g., better fitted items such as shoes, helmets, etc.). 3D printing can also address concerns with regards the waste and environmental impact of traditional manufacturing processes and supply chain approaches. This type of manufacturing – additive or direct product manufacturing – can easily reduce the number of steps required to produce parts in a production environment. In line with that, it also reduces transportation, assembly, and distribution steps. These are significant changes in workflows and processes, which will have to be identified, refined and honed. For 3D printing technology to move from the corporate environment to the general consumer market and entrepreneurial setting an entire support ecosystem has to emerge that allows people to work with this technology without creating to many inconveniences. All these activities fall clearly under the obligations of business analysts that work to create the highest value providing environments for organizations.
- There is historical precedence showing that with breakthroughs in quality and cost when producing basic materials, there is an parallel cycle of disruptive growth. A perfect example is the Second Industrial Revolution (1860 – 1920). During that time there were advances in steel manufacturing technologies, which in turn drove rapid innovation and expansion; (e.g., mass production of bridges, skyscrapers, ships, etc.). We are currently experiencing a similar revolution. The development of advanced materials with not-before-seen attributes which potentially can enable innovations in a large range of areas from infrastructure construction to medicine. E.g., smart materials that are self-healing or self-cleaning, memory metals that can revert to their original shapes, piezoelectric ceramics, crystals that turn pressure into energy, nano-materials. Some nano-technology in its more basic forms, already is a reality with a growing role in industry, medicine and the lives of consumers and the public in general. The mano-materials properties shown here will allow for advances across many of the other technologies that are mentioned in this slide deck; i.e., new sensors, actuators, advanced robotics, Internet of Things, etc…. Business leaders particularly in health care, manufacturing, and electronics should consider how nano-materials can be used to create new products or make existing products better. In parallel, policy makers must address questions / issues / and implications of using these new types of materials and associated technologies. The questions, issues, and implications are broad, ranging from business organizations, government, consumers, and the general public. Strategy oriented analysis of business and government organizations on how to best create, how and where to use new products or improve existing ones, and how and where to use them to the biggest benefit to society as a whole, is an important foundational activity that will take much effort and one in which strategic business analyst can play a pivotal role.
- The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market. So why another definition? What’s the difference between these two terms? Both terms are widely used interchangeably. However the term “disruptive innovation” is now preferred. The reason for that is of interest to business analysts. It has been found that market disruption is typically NOT a function of the technology itself. Rather, market disruption is usually a function of its changing application! What do we mean by that? To get a better picture, we need to introduce another term: “Sustaining Innovation”. Typically, these are innovations in technology. Disruptive innovations in comparison, are changes that effect entire markets. Consider the automobile. It was a revolutionary technological innovation. But it was not a disruptive innovation. Why can we say that? Because early automobiles were expensive luxury items, and as such did not disrupt the existing market for horse-drawn carriages. In other words, the transportation market stayed essentially the same. However, once automobiles were mass-produced, and thus becoming much less expensive, it turned into a disruptive innovation. Why? Because it now disrupted – or changed – the entire transportation market.